Long Term Care Insurance Helps Leave a Legacy
To create an effective estate plan, there must be an estate to plan. Experienced financial advisors have traditionally emphasized tax consequences, financial factors and their client’s testamentary intent in designing an estate plan. Few give similar consideration to the cost of Long-Term Health Care and its potential for decimating acquired wealth. Thus, by the time the individual has died, it may well be that little or no estate remains because the funds have been consumed by the cost of nursing home care or extensive paid care at home.
A year of care at a high quality nursing home or three shifts of qualified home care health workers per day can amount to well over $100,000 annually – per spouse. Assume that both husband and wife need care, and that care is required for 3 years by one spouse and for 7 years by the other. In such a case, it is clear that even an estate well over $1 million will be much smaller (if any exists at all) by the time the disappointed heirs inherit it.
Today, there are several ways to prevent depletion of an estate. Chief among them is Long-Term Care Insurance.
What is Long Term Care?
Many people think “Long Term Care” means a nursing home. In fact, Long Term Care includes a wide continuum of care situations. Some people receive Long Term Care in an Assisted Living Facility, others attend an Adult Day Care Facility, and for many, Long Term Care can also be received in your own home.The level of care depends on several factors. These include the type of impairment, the severity of impairment, and in some cases, the ability to pay for care. Long Term Care services may be necessary at any age. The following are three of the most common reasons for Long Term Care:
Short Term Medical Treatment – Long Term care may be needed when an individual is recovering from surgery or other temporary conditions. For many, Long Term Care helps leaving the hospital and going home.
Accidents and Injuries – Acute conditions such as broken hips, strokes, disabling accidents and heart attacks often require a longer period of Long Term Care.
Chronic Illness – Ongoing conditions such as dementia, emphysema or even functional decline (due to the aging process) will result in an extended need for Long Term Care services.
Long Term care services are generally custodial and personal in nature. Because neither Medicare nor medical insurance pay for any custodial care, this should be a major concern to you.
How Will I Know That Long-Term Care Insurance Is Right For Me?
Everyone age 50 or older is a prime candidate for Long-Term Care Insurance. The Earlier you take out a policy, the better. In most cases, you will almost certainly pay less in premiums over the life of the policy than if you ever need even one year in a nursing facility. It is by planning NOW that you can secure your future at a lower cost!
If you recognize that you are not superman or superwoman, and that there is a reasonably good chance that you will need someone to help take care of you before you die, you should be looking at Long-Term Care Insurance. If you plan ahead, own your own home, and have some savings and investments to protect, then you should be a step beyond look, because there is probably a Long-Term Care plan available that you could afford without affecting your present lifestyle. When all is said and done, in order for you to take out and keep a Long-Term Care Insurance policy, you must be more comfortable doing without the money you pay for premiums than you would be if you kept the money and remained self-insured. Long-Term Care Insurance should give you security and peace-of-mind. Most of my clients have concluded that saving a lot more money in their retirement years is not the objective anymore; however, protecting what they do have so they won’t lose it all before they die is a major objective.
Long-Term Care Is The Biggest Reason For Financial Failure Among Seniors Today!
In fact, over 70% of Americans believe they will not be able to cover their Long-Term Care expenses!
Most of us would jeopardize our life savings if we did without Long-Term Care Insurance. However, I have clients who truly could self-insure if they wanted to, and perhaps my experience with them will clarify the logic of taking out this coverage: if people who are so wealthy sees the benefits of coverage, what does that say to those of us who are not as fortunate financially?
I have one client in particular in mind. This client has many investments and is a very wealthy man. He could obviously afford to do without Long-Term Care Insurance, and when I met him, I advised him he did not really need this type of protection. He told me something I will never forget: He said, “It is true that I could do without Long-Term Care Insurance; in fact, I could build my own nursing home! But, do you know what it would cost if my wife and I had to enter a nursing home at the same time 15 years from now?” I replied that I had a pretty good idea based on today’s trends, adding that the cost could be as high as $160,000 per year. He then continued, “I know that it would be somewhat unusual for us both to end up in a nursing home at the same time, but would you also agree that is would a little unusual for a person to stay in a nursing home over 13 years?” I agreed that would be somewhat unusual since the majority of people for not spend over 5 years in such care. He continued his story: “Yes, it is unusual, but my mother-in-law has been in a nursing home for that long, and I am still paying the bill! It doesn’t appear that she is near death, so she may stay several more years. The cost of this care has already exceeded $500,000. Even though I could take my chances, I don’t think it makes sense for my wife and I to take that kind of risk, just to save a few thousand dollars a years in premiums. Can you provide me with a plan that would alleviate this risk?”
It’s quiet now. Finally, a few moments to myself. My sister is gone, and dad is resting – sort of. Please, God, let him breathe without gasping, this one night. I’m so tired. But the day is not over for me. Tonight is my night to help out. Three nights ago it was my night, too. Dad and I spent much of it struggling – him to catch his breath, me to keep my composure.
Tonight he seems a little stronger, but he’s still so weak. Hard to believe he was golfing a few weeks ago. How quickly life changes, and how vulnerable we feel as children. Dad has been our only parent for the past 22 years – the memories, the history of a family, all gain new significance during this trying period. Now my sister and I assume the role of “grown-ups.” Will we soon become the oldest generation in our family?
For a week we take turns around the clock, bathing him, dressing him and trying to find something he will eat – all done with the vision of keeping him home and not moving into a nursing home. We struggle between our commitment to provide for our father and out inability to do so as his condition worsens. After much discussion dad is the one who decides that his best chance for recovery is the nursing home. It is extremely difficult for us to take dad away from his home – but a decision made easier because six years earlier, when dad turned 70, my sister and I purchased Long-Term Care Insurance for him. He knew I was selling it and looked into the insurance out of fear that his bills might literally cost him the farm. He knew things could change quickly at his age. In this case he was right.
As a Long-Term Care Insurance sales professional, I now know why my clients often say they’re buying Long-Term Care Insurance to stay out of a nursing home, Many people envision the nursing home as a crowded, noisy place with little privacy. Unfortunately, they’re not far off. Spend any amount of time in one, and you will soon discover how important a private room is to one’s dignity.
One night when Dad and I were watching the Chicago Cubs on TV, he said, “You know the best thing about this insurance you kids bought for me?” He looked at me and Said, “I don’t share my room with anyone, and no one else uses my bathroom.” He then noted how difficult it was for so many of his friends who did share rooms with those who suffered from dementia, incontinence and other frailties of old age. Another lesson learned from dad: Dignity is as important as 87 as it is at 57, 27, or 7. Long-Term Care Insurance gave my father a room to himself and the dignity he deserved.
The insurance also took the burden off us kids to provide care, giving us the freedom to just love our father…to sit up late watching the Cubs, to laugh, to cement memories and to honor this man we called dad. These things were nearly impossible when we were taking care of him at home. Exhaustion and fear do not leave time for that.
Long-Term Care Insurance is designed to help people live independently as long as possible, even with a chronic illness, physical disability or cognitive disorder. Aging gracefully has never been easier because Long-Term Care Insurance does indeed allow a much higher level of coping, both for the patient and their family. It can include medical treatment, skilled nursing, assisted living and help with basic daily functions such a dressing, bathing, household chores and required therapy. It was a relief that, when dad needed those things, the professionals came in the door and we walked out the door, leaving the care to them.
The burden for asset preservation is ours. The scary prospect that our nest eggs might someday be spent on assistance with our daily functions needs to be dealt with today. Long-Term Care is a blind spot in our culture’s collective consciousness and a weakness in our financial planning that must be addressed now, not later.
Today my sister and I remember dad just the way he wanted to be remembered – and the way we want to remember him. The greatest gift I have given to myself and my own children is my Long-Term Care coverage. I know I will be able to age gracefully and with dignity and choice.
The Importance of Long Term Care In Retirement Planning
People planning for retirement typically know where they’ll get the money to pay for living expenses and many of the extra things they want to so. But all too often, they fail to plan for long term care expenses. And that can be a costly mistake.
Long term care services are expensive. Based on Mutual of Omaha’s Cost-of-Care Survey, the nationals average cost for one year of nursing home care in a semi-private room is $86,662.00. And that’s just for one person. If both husband and wife need long term care services, a retirement nest egg can be depleted quickly.
So how do people plan to pay for the care they need? Some mistakenly believe their health insurance will cover their long term care expenses. Others plan to let the government take care of them. In reality, health insurance doesn’t cover long term care. And the coverage provided by government programs is limited. For example, Medicare provides some short term coverage simply to help people get back on their feet after an accident or illness. And while Medicaid does pay for long term care services (typically nursing home care), it only pays for people who have no other resources. And for many people, that means spending down assets to qualify.
That leaves two alternatives: Pay for long term care services using retirement assets or protect retirement savings with a long term care insurance policy.
Planning to pay the cost of long term care services out of pocket may seem reasonable. But many people fail to think about the real cost associated with that plan. First, assets may have to be liquidated, which could mean cashing in stocks, selling property or dipping into 401(k) or savings accounts. In addition, liquidating assets may trigger additional costs in the form of capital gains tax, income tax and potential surrender charges. It also has the potential to deplete the inheritance planned for family members.
Purchasing a long term care insurance policy may be the best way to help peole make their retirement assets last as long as possible. For a fraction of the cost they would pay to a nursing home, assisted facility or home health care provider, they can purchase a policy to help pay those bills while protecting a significant portion of their retirement fund.
With all the retirement planning options available, it’s important to remember one thing…people need enough retirement income to cover their expenses. And putting a plan in place to pay for long term care expenses using a long term care insurance policy can be a smart way to make retirement income last longer.